The Organisation of Petroleum Exporting Countries (OPEC) has said that the global oil market should be more balanced next year as China and the developing world use more oil, while supply from North America slows down.
OPEC, in its monthly report released recently said it expected world oil demand to increase by 1.34 million barrels per day (bpd) in 2016, up from a growth of 1.28 million bpd this year.
World oil demand growth should outpace any increase in supply from non-OPEC sources and ultra-light oil such as condensate, increasing consumption of OPEC crude, it said. This would imply an improvement towards a more balanced market, OPECs in-house economists said in the report.
OPEC has increased production sharply over the last year as its most powerful member, Saudi Arabia, and other core producers in the Middle East Gulf attempt to build market share, leading to higher inventories worldwide.
OPEC said Saudi Arabia reported that it pumped 10.56 million bpd last month, up 231,000 bpd from May. According to industry data, that will be a record high.
Higher OPEC production has been a major factor behind a collapse in oil prices, which are now around half their levels of a year ago. Benchmark Brent crude traded around $58.70 a barrel recently, down from a peak above $115 in June 2014.
Lower prices have squeezed high-cost oil producers and brought a sharp fall in the number of oil exploration rigs in operation, particularly across North America.
OPEC said the supply of oil from non-OPEC producers was expected to grow by only 300,000bpd in 2016, down sharply from growth of 860,000bpd this year.